WHEN AND HOW THE PUNISHMENT MUST FIT THE CRIME

George J. Mailath, Volker Nocke*, Lucy White

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    5 Citations (Scopus)

    Abstract

    In repeated normal-form (simultaneous-move) games, simple penal codes (Abreu, Journal of Economic Theory 39(1) (1986), 191–225; and Econometrica 56(2) (1988), 383–96) permit an elegant characterization of the set of subgame-perfect outcomes. We show that in repeated extensive-form games such a characterization no longer obtains. By means of examples, we identify two types of settings in which a subgame-perfect outcome may be supported only by a profile with the property that the continuation play after a deviation is tailored not only to the identity of the deviator but also to the nature of the deviation.

    Original languageEnglish
    Pages (from-to)315-330
    Number of pages16
    JournalInternational Economic Review
    Volume58
    Issue number2
    DOIs
    Publication statusPublished - May 2017

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